Detached and new-build homes' effect on house price averages

In his latest column for The Scotsman, David Alexander covers the performance of new-build and detached homes, and how they are supporting the Scottish property market.

One sign of a buoyant housing market is when you hear something which genuinely surprises you after over 40 years in the property business. Recently two houses in Moray Place in Edinburgh’s New Town sold for £4.8m and £4.9m. Prices that, even a couple of years ago, would have sent shock waves through the capital’s housing market yet they are becoming, if not commonplace, then at least not unheard of.

Larger homes, usually detached, alongside new-builds and certain geographic areas surrounding Edinburgh are proving bulletproof in terms of pricing and are helping to maintain Scotland’s average house prices when these numbers are falling in other parts of the country and across the rest of the UK.

Our analysis of the latest official figures highlights an increasing difference in the performance of different types of homes as well as geographic locations. Detached homes continue to increase in average price despite enormous gains over the last three years.

While average house prices in Scotland have fallen slightly by 1.19% between July 2022 and June 2023 detached and, particularly, new-build homes have continued to rise. The average price of detached homes between July 2022 and June 2023 rose by 0.42% across Scotland with Aberdeen prices falling by 3.04% while Edinburgh and Glasgow rose by 2.72% and 1.33% respectively.

But it is the average price increase among sales of new-build homes which is more remarkable where they rose by 14.99% in Scotland between May 2022 and April 2023 (the dates differ slightly from the wider price data as April is the latest month for which there are figures). Edinburgh had the highest price increase of 16.74%; Glasgow was at 12.64%; Dundee up by 9.75%; and Aberdeen rose by 4.66%.

There is also a growing geographic divide between Edinburgh and the surrounding areas which are all still showing average price rises at a time when much of the rest of Scotland is either stable or falling. Edinburgh is the only city in Scotland where average prices are still rising while in East Lothian prices rose by 14.7% over the last year; in Fife prices were up 2.9%; and in West Lothian they increased by 1.4%.

New-builds are attracting ever higher prices at a time when the wider market is slowing or even experiencing price falls. This could be due to a number of factors but the advantage of new-builds is that the price is fixed, and you aren’t in a bidding war for a property which can make them more attractive to buyers who know exactly how much they have to pay, and buyers don’t have to do any work on their new home.

The continued growth in Edinburgh and surrounding areas is positive but there may be a danger that one part of the country is becoming unaffordable to those outwith those areas. It is clear that Edinburgh and its near neighbours are attracting prospective buyers from across Scotland, the rest of the UK, and internationally as the capital’s reputation, it’s renowned lifestyle options for eating out, its cultural offerings, and widely accessible green spaces make for a perfect package to entice homeowners from anywhere in the world.

Whether this performance will persist must be questionable as there comes a point when people have to take a step back and consider whether they are simply paying too much for a property. That position does not yet seem to have been reached. Enthusiasm for larger properties, for homes in fashionable areas such as Stockbridge and the New Town continue unabated, and demand continues to outstrip supply.

The recent interest rate rises seem to be having little impact on buyers in the capital and it remains to seen, where the market goes in the coming months but at the moment it remains extremely vibrant and dynamic.

Average house prices between July 2022 – June 2023

Date                    Scotland            Edinburgh            Glasgow               Dundee              Aberdeen

07/2                     £191,720           £328,713             £175,307             £147,441             £147,313

06/23                   £189,424           £332,029             £173,259             £144,063             £141,358

Change                 -1.19%                1.0%                  -1.17%                 -2.29%                 -4.04%

 

Average house prices between July 2022 – June 2023 by property type (Detached homes)

Date                    Scotland              Edinburgh            Glasgow               Dundee              Aberdeen

07/22                   £337,326             £740,960             £456,912             £318,152             £355,083

06/23                   £338,746             £761,139             £463,007             £315,762             £344,305

Change                 0.42%                   2.72%                 1.33%                  -0.75%                 -3.04% 

 

Average house prices between May 2022 – April 2023 by property type (New Build)

Date                     Scotland             Edinburgh            Glasgow               Dundee              Aberdeen

07/22                   £265,825             £384,920             £239,593             £191,510             £253,678

06/23                   £305,688             £449,375             £269,869             £210,184             £265,494

Change                 14.99%                16.74%               12.64%                 9.75%                  4.66%

 

As seen in The Scotsman.

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